Answer the following questions using the information below:
Yakima Manufacturing purchases trees from Cheney Lumber and processes them up to the splitoff point where two products (paper and pencil casings)are obtained. The products are then sold to an independent company that markets and distributes them to retail outlets. The following information was collected for the month of November:
The cost of purchasing 100 trees and processing them up to the splitoff point to yield 60,000 sheets of paper and 60,000 pencil casings is $3,000.
Yakima's accounting department reported no beginning inventories and an ending inventory of 2,000 sheets of paper.
-What is the sales value at the splitoff point for paper?
A)$240
B)$2,320
C)$2,400
D)$3,900

Question

Answer the following questions using the information below:
Yakima Manufacturing purchases trees from Cheney Lumber and processes them up to the splitoff point where two products (paper and pencil casings)are obtained. The products are then sold to an independent company that markets and distributes them to retail outlets. The following information was collected for the month of November:
    The cost of purchasing 100 trees and processing them up to the splitoff point to yield 60,000 sheets of paper and 60,000 pencil casings is $3,000.
Yakima's accounting department reported no beginning inventories and an ending inventory of 2,000 sheets of paper.
-What is the sales value at the splitoff point for paper?
A)$240 
B)$2,320 
C)$2,400 
D)$3,900

Quizplus · Accepted Answer

To find the sales value at the splitoff point for paper, we need to use the total cost of purchasing and processing 100 trees, which is $3,000, and the fact that we obtained 60,000 sheets of paper from those trees.

Cost per sheet of paper = total cost / total sheets of paper 
Cost per sheet of paper = $3,000 / 60,000 
Cost per sheet of paper = $0.05

To find the sales value at the splitoff point for paper, we need to multiply the cost per sheet of paper by the number of sheets of paper produced, minus the ending inventory.

Sales value at splitoff point for paper = (number of sheets of paper produced - ending inventory) x cost per sheet of paper 
Sales value at splitoff point for paper = (60,000 - 2,000) x $0.05 
Sales value at splitoff point for paper = 58,000 x $0.05 
Sales value at splitoff point for paper = $2,900

Therefore, the sales value at the splitoff point for paper is $2,900, which corresponds to choice C.

As for the best choice(s) only, we need more information or criteria to make a decision.

Answer the Following Questions Using the Information Below